Australia's Billabong says director weighs LBO, shares jump

A Billabong employee opens the company store in central Sydney August 27, 2012. REUTERS/Daniel Munoz

MELBOURNE (Reuters) - Australian surfwear company Billabong International Ltd (BBG.AX), which had potential buyers withdraw takeover offers last month, said on Monday one of its directors wanted to investigate a possible leveraged buyout of the firm.

Billabong shares jumped as much as 17.6 percent to A$0.87 on the news, valuing the firm at A$417 million ($430 million).

Private equity firms TPG TPG.UL and Bain Capital LLC withdrew from $700 million bids for the struggling retailer last month, without giving reasons, after a troubled year that has seen Billabong slash profit forecasts, replace its CEO and sell half of one of its top brands, Nixon, to pay down debt.

Billabong, which had undertaken an aggressive debt-fuelled expansion, has suffered weak sales of its namesake brand as well as its Von Zipper and Element lines, and posted its first full-year loss this year since listing.

The company said board member Paul Naude would stand aside from his role as president of the Americas for six weeks while he looked at putting together a buyout proposal.

“Mr Naude has advised that he is seeking to hold discussions with potential financiers, both debt and equity, to gain their support for a potential change-of-control transaction of Billabong,” the company said in a statement.

Billabong said there was no arrangement with any other executive about the proposal, and put conditions on Naude’s proposal including providing no confidential information to potential financiers.

The shares tumbled to record lows below A$0.80 after the potential suitors walked away in October. The stock has crumbled from a peak near A$10 in mid-2010 and an all-time high above A$14 per share in 2007.

Billabong was initially approached by TPG in February but rebuffed an offer of A$3.30 a share, opting instead to sell half of its watch brand Nixon and raise A$225 million in equity to reduce debt.

Billabong has outlined a four-year plan to simplify its business and revive sales, although it said investors would have to wait two years for the biggest benefits to flow through.

Its competitors include U.S.-listed Quiksilver Inc ZQK.N, Pacific Sunwear of California Inc PSUN.O and Zumiez Inc (ZUMZ.O), as well as smaller local rivals Rip Curl and Globe International (GLB.AX).

Privately owned Rip Curl has put itself up for sale and ASX-listed Globe is the subject of a takeover offer. ($1 = 0.9702 Australian dollars)